Job growth still very slow, forecast shows
TUESDAY, JUNE 15, 2010 AT 12:05 A.M.
The California economy is headed for a two-track recovery, with San Diego and the coastal regions coming out of the recession far ahead of the rest of the state, according to a report released Monday by UCLA’s Anderson Forecast.
Overall, the state’s economy is already on the mend, the report said. The jobless rate — which averaged 12.6 percent during the first quarter — has most likely hit its peak and will decline steadily through at least early 2012, when it finally will drop below the 10 percent mark, the report said. Job growth — while anemic by historic standards — gradually will pick up steam until it finally reaches normalcy in mid-2011.
“We are now in that strange period when the California economy is growing but job growth is extremely slow,” wrote UCLA economist Jerry Nickelsburg.
“At this point, the California economy is sitting just above the trough and well below its previous peak. And there is a long climb ahead. The stalled California economy is simply not producing the jobs required for the new entrants to the labor force over the next couple of years.”
As in other recoveries, some regions in the state will pull out of the recession ahead of others, the report said. Much of the fastest growth will occur along the coast, thanks to four key industries: education, health care, exports and technology.
Nickelsburg noted that in Southern California, there was a noticeable pickup in job growth in a number of major employment sectors between the fourth quarter of 2009 and the first quarter of 2010, led by information technology, tourism, wholesale and retail trade, and health care and education.
In contrast, the Inland Empire and the Central Valley continued to suffer job losses in most of the major categories.
Nickelsburg predicted that over the next few years, inland California will continue to be dogged by declining real estate values — because it had much higher percentages of foreclosures than the coast — as well as expected cutbacks in state and local government.
Government represents a much higher percentage of employment in the Inland Empire and Central Valley, especially Sacramento, than along the coast.
According to the forecast, San Diego County has one of the lowest percentages of government employment in the state — exceeded only by Orange County and Silicon Valley — which will mute the effect of any cutbacks over the next couple of years.
Nickelsburg said the state probably will end 2010 with 1.1 percent fewer employees than the average for 2009. Once the economy gains steam in 2011, he said, employment will begin to grow faster than the labor force and the jobless rate will begin to fall.
Although inflation-adjusted personal income is forecast to grow 1.1 percent this year, he predicts it will grow 2.9 percent in 2011 and 4.1 percent in 2012.
This isn’t the first time the state has experienced a two-track recovery, Nickelsburg said. In the early 1990s, Southern California lagged the rest of the state in emerging from recession because of its ties to the aerospace industry, which was shuttering factories and laying off workers.
In the post-dot-com downturn that started in 2001, high-tech centers of San Francisco and Silicon Valley were the last to recover.
“This time it is inland California, shaking off the housing bubble, that is bringing up the rear,” Nickelsburg wrote.
Alan Gin, an economist at the University of San Diego, said he agrees with much of the forecast’s findings — but he worries that the coastal area, like the inland, might continue to feel the effects of the housing bubble for a bit longer.
“I still think we’ll see foreclosures along the coast, not because of subprime loans, but because of highunemployment levels,” Gin said.
Dean Calbreath: (619) 293-1891; dean.calbreath@uniontrib.com
